Ethiopia, Senegal, and Tanzania whose economies depend less on extractive commodities have been predicted to grow robustly than oil producing countries, like Nigeria, Angola, Ghana, South Africa.
According to the lender in its latest “Africa’s Pulse” report, the world bank reveals that seven countries Côte d’Ivoire, Ethiopia, Kenya, Mali, Rwanda, Senegal, and Tanzania continue to exhibit economic resilience, supported by domestic demand, posting annual growth rates above 5.4% in 2015-2017.
Speaking in an audio interview the World Bank chief economist for Africa Albert Zeufack said the economies of Angola, Nigeria and South Africa — which make up 60 percent of GDP — was recovering but at a weak pace and per capita income was growing in negative terms.
Economic growth in sub-Saharan Africa is seen rising between this year and 2019, helped by better commodity prices expanding to 2.6 percent this year and further to 3.2 percent in 2018 and 3.5 percent a year later.
“We are pleased that Africa is back to growth but we are not out of the woods yet. That’s why we need to strengthen reforms to make sure stability is maintained,” Zeufack said.
“It will remain subdued for oil exporters, while metal exporters are projected to see a moderate uptick. GDP growth in countries whose economies depend less on extractive commodities should remain robust, underpinned by infrastructure investments, resilient services sectors, and the recovery of agricultural production. This is especially the case for Ethiopia, Senegal, and Tanzania.”
He said the upturn in economic activity is expected to continue in 2018-19, reflecting improvements in commodity prices, a pickup in global growth, and more supportive domestic conditions.
The bank said the 2016 growth was the worst for the region in more than two decades, hurt by poor performance in Angola, Nigeria and South Africa. Though Mali and Ivory Coast grew more than six percent.
Zeufack said tackling infrastructure was key to stability. Only 35 percent of Africans have access to electricity which is the lowest among developing countries and that road density on the continent was also the lowest in the world.
Risks to growth could occur if there is a slippage on reforms, heightened security concerns and policy uncertainty, leading to a sudden stop in investments, Zeufack said.
He also added that the growing protectionism in the West could pose a risk for sub-Saharan African economies but it could also present opportunities for the continent to be self-sufficient and create jobs.
“With poverty rates still high, regaining the growth momentum is imperative,” says Punam Chuhan-Pole, World Bank Lead Economist and the author of the report.
“Growth needs to be more inclusive and will involve tackling the slowdown in investment and the high trade logistics that stand in the way of competitiveness.”
“The analysis shows that the impact of public investment on economic growth can be improved if countries implement policies that make public investment more efficient,” says Punam Chuhan-Pole.
According to her there is evidence that countries with sound public investment management systems tend to have even more private investment.”
“Improving the institutions and procedures governing project appraisal, selection, and monitoring are among the policies countries should implement to ensure they have a sound public investment system.”